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Foxtel’s Sports and Technology Investment Photos Bohdan Warchomij November 9, 2018

Posted by bohdan.warchomij in : Metaphor Online , trackback

Working for Foxtel at the ODI between South Africa and Australia allowed me a look behind the scenes into the technology that the company has invested in to outpace its rivals. The investment in Australian cricket was evident at Optus Stadium.

Foxtel will hike the cost of its basic package for the first time in more than two years as the pay TV business attempts to offset higher programming costs and heavier investment in new technology it has made to fend off rivals.

The subscription TV business – 65 per cent owned by News Corporation and 35 per cent owned by Telstra – has informed its users it will lift the price of its basic service by 11.5 per cent, or $3, from $26 to $29 per month. The increase is more than five-times Australia’s inflation rate, which rose to 2.1 per cent in the second quarter of 2018.

The price increase comes off the back of Foxtel securing Cricket Australia’s broadcast rights in a $1.2 billion six-year deal with Seven West Media where every ball will be seen on pay TV for the first time in the sport’s history, including exclusivity over one-day international matches and some Twenty20 Big Bash League games.

 News Corp chief financial officer Susan Panuccio flagged at the company’s results in August that Foxtel would require “short-term reinvestment” as it invests in new technology, such as ultra-high-definition 4K resolution under a new set-top box as well as stand-alone sports and entertainment streaming services aimed at capturing a lower end of the market that is not willing to pay for the high end cable TV packages. The warning saw News Corp shares drop 11 per cent it next began trading.
News Corp has flagged the investment in cricket, streaming and 4K as part of a concerted push to drive subscriber growth. But, it also needs to bring in more money to fund that investment.

As of June 30, Foxtel had 2.8 million subscribers. Foxtel does not break down subscriber numbers into packages, such as platinum. However, Foxtel is expected to add at least $6 million to the pay TV company’s bottom line.

On a pro forma basis, revenues were flat over the past 12 months due to lower Foxtel subscription and advertising revenues. Total Foxtel subscribers actually grew over the year to 2.8 million, but primarily because of streaming service Foxtel Now, where average revenue per user is lower.

The business also faced increased costs for its NRL, AFL and Football Federation Australia broadcast contracts.

News Corp chief executive Robert Thomson said at the company’s full-year results there is a lot of opportunity for Foxtel to grow its subscriber base, which has been stubbornly stuck at around 30 per cent of Australian households for years, and reduce churn over summer with the addition of cricket broadband rights.

“There is no doubt Foxtel has the best portfolio of programs and sports rights, and there is no doubt what the Australian audiences are prepared to pay is far greater than previously presumed,” he said.

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